Despite ongoing retail pressure, Kohl’s surprised to the upside this quarter. The company reported better-than-expected earnings and slightly topped revenue forecasts, showing that margin discipline and operational tweaks are starting to pay off.
Analysts were bracing for a deeper loss, but Kohl’s delivered an EPS of ($0.13), beating consensus estimates by a wide $0.34 margin. Revenue came in at $3.0B, slightly above the expected $ 2.99 B.
Yet the bigger story remains: Can Kohl’s turn short-term margin gains into a sustained growth story?
Key Takeaways
Net Sales: $20.9B (⬇️ 2.1% YoY from $21.4B)
Comparable Sales: ⬇️ 1.7%, weighed down by weak DIY traffic
Gross Margin: 33.4% (flat YoY)
Operating Margin: 11.9% (vs. 12.4% last year)
Diluted EPS: $2.92 (vs. $3.06 YoY)
Net Income: $1.6B
“Our first quarter performance was ahead of expectations... Our team is focused and motivated to deliver great products, great value, and a great shopping experience.”
— Michael Bender, Interim CEO, Kohl’s
📉 Sales Dip, But Not as Bad as Feared
Top-line softness continued, with net sales down 4.1% and comps falling 3.9%. This marks the third straight quarterly comp decline. However, the sales drop was within guidance—and importantly, not worse than what Wall Street anticipated.
Net Sales: $3.0B (⬇️ 4.1% YoY)
Comparable Sales: ⬇️ 3.9%
Gross Margin: 39.9% (⬆️ 37 bps YoY)
Diluted EPS: ($0.13) vs. ($0.24) in Q1 2024
EPS Surprise vs. Est.: Beat by $0.34
📊 Profitability: Margins Improve, Loss Narrows
Operating income rose 40% YoY as Kohl’s pulled back SG&A expenses and drove margin gains. Operating margin hit 1.9%—still modest, but a clear move in the right direction. Net loss was nearly halved from last year’s Q1.
Operating Income: $60M vs. $43M
Operating Margin: 1.9% (⬆️ 58 bps)
SG&A: $1.2B (⬇️ 5.2% YoY)
Net Loss: $15M
📦 Inventory & Liquidity Snapshot
Inventory levels saw a light 2% increase, reflecting more normalized stocking after earlier overcorrections. Operating cash flow was negative, common for Q1, though the $92M outflow remains a metric to monitor.
Inventory: $3.1B (⬆️ 2%)
Operating Cash Flow: ($92M)
💵 Investing for Stability: CapEx & Dividends
Kohl’s reaffirmed its plans to invest in store refreshes and omnichannel capabilities. The company also declared a $0.125/share dividend for Q2, reflecting continued shareholder return discipline.
Capital Expenditures: $400M–$425M
Dividend Declared: $0.125/share (payable June 25)
📉 Stock Performance: A Tough Year, Despite the Beat
While the Q1 beat is encouraging, Kohl’s stock remains battered.
Past 3 Months: ⬇️ 29%
Past 12 Months: ⬇️ 61%
Still, sentiment is mixed—4 analysts revised EPS upward, while 2 revised downward in the last 90 days (per InvestingPro).
Financial health is rated as “fair performance,” suggesting Kohl’s is stable but far from out of the woods.
🔮 Full-Year Outlook: Guidance Reaffirmed
Kohl’s is standing by its FY25 projections, even as consensus EPS estimates remain more optimistic than the company’s own range.
FY25 EPS Guidance: $0.10–$0.60
Analyst Consensus: $0.67
Net Sales: (5%) to (7%) decline
Comparable Sales: (4%) to (6%) decline
Operating Margin: 2.2% to 2.6%
Final Word
Kohl’s didn’t win Q1—but it outperformed a low bar. As retail volatility continues, all eyes are now on Q2 to see whether cost discipline can offset consumer softness and help the stock rebound.
Check out the full earnings report here - Kohl’s First Quarter Financial Report